Legislation designed to put a dent in Internet gambling ran into opposition
Wednesday from the banking industry and, surprisingly, the Traditional
Values Coalition.

The Internet Gambling Prohibition Act proposes to make it illegal for
Americans to use the Internet for gambling and would authorize law
enforcement officials to stop credit card payments and other forms of
electronic payments.

Violators would be subject to up to five years in prison.

"Our concern is that the added burden of monitoring all payment transactions
for the taint of Internet gambling will drain finite resources currently
engaged in complying with anti-terrorism, anti-money laundering regulations
and the daily operation of our bank," Samuel Vallandingham, representing the
Independent Bankers of America, told a House subcommittee.

Vallandingham added, "Ultimately, we question whether the Internet gambling
bills currently before the House will efficiently regulate the targeted
behavior at a level which will justify the time and expense required by
community banks to comply with another level of regulation."

According to bill sponsor Bob Goodlatte (R-Va.), Internet gambling is
estimated to be a $12 billion industry with approximately $6 billion coming
from U.S. bettors.

Under current federal law, the Wire Act, passed by Congress in the early
1960s, prohibits making gambling wagers over the telephone. It is not
legally clear if the Wire Act actually applies to the Internet, a situation
that Goodlatte's bill hopes to correct.

"Technology has allowed for new types of electronic gambling, including
interactive games on the Internet, such as poker and blackjack, which may not
clearly be included within the types of gambling currently made illegal by
the Wire Act," the bill summary states.

The Internet Gambling Prohibition Act would crack down on illegal gambling
by updating the Wire Act to clarify that it covers all forms of interstate
gambling, such as lotteries and poker, and account for new technologies.

"While gambling is currently illegal in the United States unless regulated
by the states, the development of the Internet has made gambling easily
accessible," Goodlatte said Wednesday. "It is common for illegal gambling
businesses to operate freely until law enforcement finds and stops them."

Although it was not invited to testify at Wednesday's hearing, the
conservative Traditional Values Coalition sent a letter claiming Goodlatte's
bill would actually expand Internet gambling.

"While the [coalition] supports the stated goals of H.R. 4777, that is, to
keep gambling off the Internet, we remain deeply concerned about the
legislation's real effect," the letter states. "The Goodlatte bill could
more accurately be called the Internet Gambling Growth and Opportunity
Expansion Act."

The coalition contends that Goodlatte's bill falls short by not banning all
gambling in the United States.

As currently written, the legislation would allow intrastate Internet
lotteries, interstate horse racing and online wagering on sports fantasy
teams.

"If the bill's intent is to prohibit people from buying lottery tickets from
their living rooms, the bill could and should make such a prohibition
explicit," the letter states.

"In fact, with respect to lotteries and every
other form of non-sports gambling -- dog racing, jai alai, commercial
casinos, bingo -- the Goodlatte bill allows states to license anything they
choose."

Bruce Ohr of the Department of Justice (DoJ) told lawmakers at the hearing that
the DoJ supports the bill because the legislation amends an existing
criminal statute (the Wire Act) and applies it equally to wagering over the
Internet and over the telephone.

Ohr also commended the bill for providing law enforcement with a method to
cut off the transfer of funds to and from offshore Internet gambling sites.

"[The bill] will return control to the states by protecting the rights of
citizens in each to decide through their state legislatures if they want to
allow gambling within their borders," Goodlatte said.

"This bill leaves the
regulation of wholly intrastate betting and wagering to the states with
tight controls to ensure betting or wagering does not extent beyond their
borders or to minors."